Bank manager invested in NearZero

One of the 490 people who invested in Philip Whitley's failed company NearZero was a senior manager at a Richmond bank that had business dealings with him over a number of years.

Tracy Levenbach gave evidence in the Nelson District Court yesterday during the Richmond businessman's fraud trial.

Whitley, 48, has denied two charges laid by the Serious Fraud Office (SFO) of making false statements to get people to invest in his United States-based company NearZero.

The SFO says 490 people invested $5.3 million in NearZero between August 2006 and May 2007, on the basis that Whitley claimed to have invented a revolutionary data compression technology and had patent protection for it.

Levenbach, together with her husband, invested $90,000 in NearZero, after discussing it with her employer to ensure there was no conflict of interest.

She told the court she first met Whitley around 2000, when she was manager of ASB Bank's Richmond branch, and had opened an account for his then-business PC Warehouse. They continued to have a business relationship over the next few years.

During a courtesy visit to his home, where he had a work setup in the garage, he introduced her to his data compression technology, she said.

Mrs Levenbach, now area sales manager, continued to meet with Whitley on a professional basis, and decided to invest some money from a property sale.

At one stage there was a discussion about patents, she said. "He was looking at patenting the technology, and patents were pending. Initial discussions were that it was in New Zealand, and then later it turned to the States."

Whitley gave her a NearZero investment pack, which included promotional material and a test report. She attended an investment seminar Whitley ran in Wellington, on behalf of the bank, as opposed to being a private investor, soon after making the investment.

Another investor, Alexander Roxburgh, told the court he worked with Whitley at PC Warehouse before joining his Wakatu Estate-based company Syntiro as security asset manager. He looked after a property as it was being developed, and some security.

He said he also put Whitley in touch with an Auckland-based security expert after it was suggested that security needed to be stepped up, especially if Whitley was travelling overseas to meet people who required a high level of protection.

Mr Roxburgh said he invested $65,000 in NearZero, some in cash and some from money owing to him. He also attended an investment seminar in Wellington, although he could not remember the details.

He remembered talking about the patent, and understood it "had gone through a first stage".

Under cross-examination by Whitley's lawyer Tony Bamford, Mr Roxburgh said up to nine security personal had been hired. He did not think this was excessive if the technology had been proven, but there did appear to be an element of "jobs for the boys".

Mr Roxburgh said Whitley often came to work late, due to late-night phone calls with intellectual property manager Sharif Safwat. Other calls left Whitley appearing very high or low, he said.

A third investor, Auckland man Dean Payn, said he invested $30,000, as he considered it "too good an opportunity to pass up".

- © Fairfax NZ News